20% drop in Coinbase shares following SEC lawsuit
At the opening of trade on June 6, shares of cryptocurrency exchange Coinbase fell more than 20%.
At the market opening on June 6, the shares of cryptocurrency exchange Coinbase fell more than 20%. Shares had hit an intraday low of $46.43 at the time of writing, but they have since pared some of their losses and are presently trading at $50.14. The corporation now has a $13.7 billion market capitalization.
SEC lawsuit causes a 20% drop in Coinbase shares
The shares of cryptocurrency exchange Coinbase plummeted more than 20% at the start of trading on June 6. At the time of writing, shares had fallen as low as $46.43 for the day, but they have since recovered some of their losses and are now trading at $50.14. The company's market capitalization is now $13.7 billion.
On the same day, Coinbase was sued by the US Securities and Exchange Commission for operating an unlicensed national securities exchange, broker, and clearing agency and failing to register the offer and sale of its staking-as-a-service program for digital assets. Gary Gensler, chair of the SEC, stated:
"Coinbase's alleged failures rob investors of essential safeguards, including rulebooks that prevent fraud and manipulation, accurate disclosure, measures against conflicts of interest, and regular SEC inspection," according to the SEC.
A task group made up of 10 state securities authorities from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin filed a show-cause order against Coinbase concurrently with the SEC's statement. By providing accounts for its staking rewards program to Alabama citizens without registering to offer or sell these securities, Coinbase, according to the decision, "violates the securities law."
In accordance with the ruling, Coinbase has 28 days to react and provide justifications for why they should not be told to stop offering unregistered securities in Alabama.
Coinbase stock made its debut on the American Nasdaq market on April 14, 2021. Since reaching an all-time high of $435 on the day of listing, shares have dropped 88%. The exchange has to submit a Form S-1 to the SEC in order to register with the watchdog and receive regulatory clearance as part of its listing requirement.
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